Question 1

Business documents can provide evidence that a transaction has occurred.

Accepted Answer

Business documents such as receipts, invoices, and contracts serve as evidence that a transaction has taken place between two or more parties.

Question 2

The double-entry system is a logical method for recording transactions and results in equal debits and credits for each transaction.

Accepted Answer

The double-entry system requires that each transaction is recorded with at least two accounts, resulting in equal debits and credits. This ensures that the accounting equation (Assets = Liabilities + Equity) is always in balance.

Question 3

The normal balance of any account is the

Accepted Answer

The normal balance of an account is the side which increases that account. This means that for asset accounts such as Cash and Accounts Receivable, the normal balance is on the left side, while for liability and equity accounts such as Accounts Payable and Retained Earnings, the normal balance is on the right side.

Question 4

If a company has overdrawn its bank balance, then

Accepted Answer

When a company overdraws its bank balance, it means the bank account has a negative balance. In accounting terms, this is represented as a credit balance in the company's cash account, indicating the company owes money to the bank.

Question 5

During February 2021, its first month of operations, the stockholders of Ariel Pink Enterprises invested cash of $50,000.Ariel had cash revenues of $10,000 and paid expenses of $14,000.Assuming no other transactions impacted the cash account, what is the balance in Cash at February 28?

Accepted Answer

The initial cash investment was $50,000. Ariel had cash revenues of $10,000, increasing cash to $60,000. Expenses paid were $14,000, reducing cash to $46,000. Thus, the cash balance is $46,000 debit.

Question 6

The recording process occurs

Accepted Answer

The recording process involves the systematic and continuous recording of financial transactions during the accounting period. This process is typically performed repeatedly and regularly throughout the accounting period to ensure accurate financial reporting. In a manual accounting system, this process may be time-consuming and require considerable effort, but it is still an essential component of effective financial management. As such, the best answer is C - repeatedly during the accounting period.

Question 7

Management could determine the amounts due from customers by examining which ledger account?

Accepted Answer

The ledger account for customers' payments is Accounts Receivable. This account tracks all the money that customers owe the company for products or services rendered. By examining this account, management can determine the amounts due from customers.  A) Service Revenue tracks the money the company earned from delivering products or services. B) Accounts Payable tracks the company's outstanding bills to its suppliers. D) Supplies track the inventory of materials or products that the company has on hand.

Question 8

The steps in preparing a trial balance include all of the following except

Accepted Answer

The steps in preparing a trial balance include listing the account titles and their balances, totaling the debit and credit columns, and proving the equality of the two columns. However, transferring journal amounts to ledger accounts is not a step in preparing a trial balance, but rather a step in the overall accounting process.

Question 9

Posting of journal entries should be done in

Accepted Answer

Journal entries are typically posted in chronological order to reflect the timeline of transactions. This allows for easier tracking and understanding of the company's financial activity over time.

Question 10

The chart of accounts used by Notwist Copy Company is listed below.You are to indicate the proper accounts to 1.

Accepted Answer

The answer of The chart of accounts used by Notwist...

Question 11

Each transaction must be analyzed in terms of its effect on the accounts before it can be recorded in a journal.

Accepted Answer

This statement is true. Before a transaction can be recorded in a journal, its impact on the relevant accounts must be analyzed to ensure that the accounting equation remains in balance. This analysis involves identifying which accounts are affected and whether their balances will increase or decrease as a result of the transaction.

Question 12

The normal balance of an expense account is a credit.

Accepted Answer

The normal balance of an expense account is a debit. The expenses are recorded as debits and the balance is increased with debits and decreased with credits.

Question 13

The double-entry system requires that each transaction must be recorded

Accepted Answer

The double-entry system requires that each transaction must be recorded in at least two different accounts, one account will be debited while the other will be credited. This ensures the accuracy and completeness of the accounting records. The other options are not correct because transactions are not recorded in two sets of books or first as revenue and then as an expense. While a journal and a ledger are used, they are not the only places where transactions are recorded.

Question 14

Which of the accounts listed below is not a subdivision of retained earnings?

Accepted Answer

Retained earnings are a subsection of stockholder's equity that represents the cumulative earnings kept by the company and not distributed as dividends. Common stock, on the other hand, represents the equity capital paid into the company by its owners when they purchase shares of stock. Therefore, common stock is not a subdivision of retained earnings but a separate category within stockholder's equity. The other options listed, such as dividends, revenues, and expenses, all affect retained earnings and are subdivisions of that category.

Question 15

At January 31, 2021, the balance in Aislers Inc.'s supplies account was $750.During February, Aislers purchased supplies of $900 and used supplies of $1,125.At the end of
February, the balance in the supplies account should be

Accepted Answer

The balance starts at $750, and with an additional purchase of $900, the total comes to $1,650. After using $1,125 worth of supplies, the remaining balance is $525 ($1,650 - $1,125 = $525), which is a debit balance because supplies are an asset account.

Question 16

A compound journal entry involves

Accepted Answer

A compound journal entry involves three or more accounts being affected, meaning that choice C is the correct choice. Choices A and B are incorrect because they do not account for the possibility of more than two or three accounts being involved in the entry, respectively. Choice D is incorrect because it is too specific and limits the number of accounts that can be involved in the compound journal entry.

Question 17

The ledger accounts should be arranged in

Accepted Answer

The ledger accounts should be arranged in financial statement order, which means grouping accounts according to their respective financial statement categories, such as assets, liabilities, equity, revenues, and expenses. This helps to facilitate the preparation and analysis of financial statements. Chronological or alphabetical order would not provide the same level of organization and usefulness in financial reporting. Order of appearance in the journal is also not a practical way to arrange ledger accounts since there may be multiple journal entries for the same account.

Question 18

A trial balance may balance even when each of the following occurs except when

Accepted Answer

A transposition error affects the balance because it involves switching numbers, which can lead to an imbalance in the trial balance.

Question 19

The chart of accounts is a

Accepted Answer

The chart of accounts is a listing of the accounts and their corresponding numbers used to identify their location in the ledger. It is a necessary tool for organizing and categorizing financial transactions for a business or organization. It does not necessarily include balances and is not primarily used to prove the mathematical accuracy of the ledger. While it is a required step in the recording process, it is more than just a step, as it sets up the entire structure for recording transactions.

Question 20

Under a double-entry system, show how the entry in each statement is entered in the ledger by using debit or credit to indicate the increase or decrease in the affected account.

Accepted Answer

The answer of Under a double-entry system, show how the...

Quiz 2: The Recording Process